The document discusses the roles and responsibilities of merchant bankers in India according to SEBI regulations. Key points: - Merchant bankers are regulated by SEBI and involved in public issues, rights issues, open offers, and buybacks. - They must meet requirements for capital, staffing, experience, and qualifications. - As lead managers, they perform key functions like pricing issues, marketing, and preparing offer documents. - Post-issue, they monitor allotments and refunds, file reports, and ensure investor grievances are addressed.

1. Issue
Management

2. Merchant-Banking Services
 SEBI (Merchant Banker) Regulations, 1992,
defines ‘merchant banker’ as:
 any person engaged in issue mgt.
 selling, buying or subscribing to securities
 acting as manager, consultant or advisor for
such services.
 mandatory in case of public issues, right issues,
open offers or buy-back.
 cannot carry any fund based activity.

3. SEBI (Merchant Banker)
Regulation, 1992
The applicant should comply with following:
 a body corporate other than NBFC under Clause
(f) of Section 45-1 of RBI Act1934.
 not to hold or accept public deposit.
 adequate office space, equipments and
manpower to perform duties.
 employ min. two persons having experience.

4. SEBI (Merchant Banker)
Regulation, 1992
 adequate capital not less than Rs.5 crores.
 not involved in any litigation connected to
securities affecting business.
 not involved in any offence of moral turpitude or
guilty in any economic offence.
 Prof. qualification from institute recognized by
govt. in finance, law or business mgt.

5. Certificate of Registration
 granted under Regulation 8 and renewal under
Regulation 9.
 valid up to 3 years from date of registration.
 after 30 June, 1998, a bank or public financial
company can carry out business only in
securities market.

6. Functions
The lead manager performs following:
 pricing the issue.
 timing the issue.
 marketing the issue.
 preparing the offer document.
 listing & allotment/refund.

7. Number
No. of Merchant
Size of Issue
Bankers
Less than Rs.50 crores Two
Rs.50 crores > Rs.100 crores
Three
Rs.100 crores > Rs. 200 crores Four
Rs.200 crores > Rs.400 crores Five
Above Rs.400 crores Agreed by Board

8. Responsibilities
 No lead manager shall agree to manage the
issue:
 unless his responsibilities i.e. disclosures,
allotment and refund are defined clearly &
statement furnished 1 month before the issue.
 made by any body corporate, if it is an associate
of lead merchant banker.
 Information to Board to be submitted within 15
days after entering into any such transaction.

9. Disclosures to SEBI
Following information to be disclosed:
 responsibilities with regard to mgt. of issue.
 change in information previously furnished.
 names of body corporate associated in present
or past.
 if any breach in regard to capital adequacy.
 any other activity as manager, underwriter,
consultant or advisor.

10. Compliance Officer
 every merchant banker to appoint compliance
officer.
 Duties of compliance officer:
 monitor & report to Board any non-compliance
of Act, rules & regulations, notifications,
guidelines or instructions issued.
 deficiencies do not recur.

11. Pre-Issue Obligations
 Documents to be submitted along with Offer
Document by the Lead Manager
 MOU
 Inter-se Allocation of Responsibilities
 Due-Diligence Certificate
 Certificates signed by Company Secretary or
Chartered Accountant

12. Pre-Issue Obligations
 List of Promoters’ Group & other details
 promoter individual shareholding.
 stock exchanges on which securities proposed to be
listed, Permanent A/c No., Bank A/c No. & passport
No. of promoters.
 Undertaking to SEBI
 by ‘promoter’, ‘promoter group’ & relatives of
‘promoters’
 b/w date of filling offer documents & date of closure
of issue.

13. Pre-Issue Obligations
Appointment of Intermediaries
 Merchant Banker not lead manage issue:
 If he is a promoter or a director of issuer company.
 can manage if securities listed/proposed to be listed
on OTCEI.
 Merchant Banker lead manage issue:
 associate of issuer company.
 involved in marketing of issue.

14. Pre-Issue Obligations
Underwriting
The lead merchant banker shall satisfy themselves
about the ability of the underwriters to discharge
their underwiting obligations.The lead merchant
banker shall:
1.Incorporate a statement in the offer document to
the effect that in the opinion of the lead merchant
banker, the underwriters’s assets are adequate to
meet their underwriting obligations.

15. 2. Obtain the underwriters written consent before including
their names as underwriters in the final offer document.
In respect of every underwritten issue, the lead merchant
banker shall undertake a minimum underwriting obligation
of 5% of the total underwriting commitment or Rs. 25 lakhs ,
whichever is less.
Offer document to be made public
the draft offer document filed with the SEBI shall be made
public for a period of 21 days, from the date of filing the
offer document with the SEBI.
The lead merchant banker shall :
1. While filing the draft- offer document with the board can
also file the draft offer document with the stock exchange.

16. 2. While filing the copy of the red-herring prospectus,
prospectus or letter of offer , as the case may be , with the
board, can also file the copy of red herring prospectus ,
prospectus with the stock exchange.
3. Make copies of the draft offer-document available to the
public and final-offer documents on the websites of all the
lead managers associated with the issue
No-complaint certificate
After a period of 21 days from the date the draft offer
document was made public , the lead merchant banker shall
file a statement with the board:
1. Giving a list of complaints received by it.
2. A statement whether it is proposed to amend or not

17. Mandatory collection centres
the minimum number of collection centres for an
issue of capital shall be:
• The four metropolitan centres situated at Mumbai,
Delhi , Calcutta and chennai.
• All such centres where stock exchange are located in
the region in which the registered office of the
company is situated.
• The regional division of collection centres.

18. Authorised collection agents
The issuer company can appoint authorized
collection agents in consultation with the lead
merchant banker, subject to necessary disclosures
including the names and addresses of such agents
are made in the offer document.
The collection agents may collect such applications ,
as are accompanied by payment of application
monies paid by cheque, drafts.
The application forms, along with the duly reconciled
schedules, shall be forwarded by the collection agent
to the registrar issue

19. Ageements with depositors
the lead manager shall ensure the issuer company has
entered into agreements with all the depositories for
dematerialisation of securities. He shall also ensure that an
option be given to the investors to receive the allotment of
securities in a dematerialised form, through any of the
depositors .

20. POST-ISSUE OBLIGATIONS
• Post issue monitoring reports
The post issue lead merchant banker shall ensure
the submission of the post issue monitoring reports
Due diligence certificate to be submitted with the
final post issue monitoring report. The post issue
lead merchant banker shall file a due diligence
certificate in the format specified along with the
final post issue monitoring report

21. Redressal of the investor grievances
The post-issue lead merchant banker shall actively
associate himself with post-issue activities namely
allotment, refund and despatch and shall regularly
monitor redressal of investor.
Coordination with the intermediaries
The post-issue lead merchant banker shall maintain
close coordination with the Registrars to the Issue.
Any act of omission or commission on the part of
intermediaries shall be reported to the Board

22. Underwriters
• the lead merchant banker shall satisfy himself that
the issue is fully subscribed before announcing
closure of the issue
• the lead merchant banker shall ensure that the
underwriters honour their commitment within 60
days from the date of closure of the issue.
• 3. The lead merchant banker shall furnish
informationin respect of underwriters who failed to
meet their underwriting devolvements

23. Bank to issue
• The post-issue lead merchant banker shall ensure
that moneys received pursuant to the issue are kept
in a separate bank (i.e Bankers to issue )as per the
provisions of section 73(3) of the companies act,
1956.
Post issue advertisements
• Post- issue lead merchant banker shall ensure that
in all issues, advertisement giving details relating to
oversubscription, basis on allotment, number, value
and percentage of application received etc. is
released within 10 days.

24. Basis of allotment
In a public issue of securities , the managing director
along with the lead merchant banker and the registrar
to an issue, shall ensure that basis of allotments is
finalised in a fair and proper manner
Proportionate-allotment Procedure
an allotment shall be made on a proportionate basis
within the specified categories . The proportionate
allotments of securities in an issue, that is
oversubscribed shall be subject to reservation for the
retail individual investors as described in the
following:

25. 1. A minimum 50% of the net offer of securities to the
public shall initially be made available for the
allotment to retail individual investors as the case
may be .
2.the balance net offer of securities to the public shall
be made available for allotment to:
a) individual applicants other than retail individual
investors
b) other investors including corporate bodies/
institutions , irrespective of the number of shares,
debentures and so on , applied for .

26. 3. The unsubscribed portion of the net offer to any one
of the categories may be made available for allotment
to applicants in the other category, if so required